Kevin's Weblog

I had lunch today with a couple former co-workers. It’s a little funny how many people who used to work for Overture are now working in the SEO/SEM biz. Personally, I plan to get completely away from advertising when I do decide to move on. At any rate, it’s interesting to hear some perspectives from the other side of the checkbooks. One thing that came up was that they really dislike the short title and description limits on Google because it takes a lot more effort to write them. Also, people click on short ads more often, but don’t convert as frequently (because the ads don’t contain as much information for readers to use to decide relevance). From the advertiser point of view, this is a negative, since they’re getting less well-qualified traffic.

Over on the publisher side of things, there’s been a lot of people mentioning that YPN has lower CTR, but higher PPC than Google, and that the net revenue is about the same or slightly higher. There are probably a number of factors behind that. (I suspect that we have somewhat different ad selection strategies, for example.) But, part of it may be due to the difference in creative lengths. Assuming the market is reasonably efficient, if shorter ads on AdSense result in users making more clicks but no more purchases, than advertisers ought to respond by lowering their bids. If conversions stay constant, then we expect the total advertiser spending, and publisher revenue, to balance out as observed. If we refine the analysis a little further, we would actually expect revenues on Google to be somewhat lower as advertisers should demand a risk discount for less predictable user referrals. However, one should take that with a grain of salt, since there are other differences present as well, and I’m not sure if I actually believe that most advertisers are quite that rigorously economically rational.